Tell me what do you think of when you hear anything about the 1980s. Most people would say that the first thing that comes to their head about the 80s would be about having fashion trends, with “big hair,” and when hip-hop, punk rock became well know. In which throughout this decade, a number of significant events occurred that had a major impact on the 80s decade. I will go over the key things that they happen in the 1980s economy that most people may not know about.
What was the economy like in the 1980s?
The economy was unsteady, because of the recession of the 1980s. The early 1980s recession coincided with the early years of Ronald Reagan’s presidency, and it impacted all parts of the United States, just as it did the rest of the world. The unemployment rate surpassed 10%, while the GNP (gross national product) dropped by 2.5 percent. Ronald Reagan launched a domestic program based on supply-side economics theory shortly after taking office in January 1981.
Reagan pushed through a series of tax cuts and suggested cuts to social programs during his presidency. He also launched a push to minimize and repeal government rules that have an impact on consumers, workers, and the environment.
The rise of the populist conservative movement in the early 1980s was likewise unusual (now known as the New Right). That decade, however, was dominated by the so-called Reagan Revolution and Reaganomics. Ronald Reagan championed his well-known economic policies after winning the election and being sworn in as the 40th President of the United States.
They were initially less successful than their supporters had hoped, but they were nonetheless able to balance the budget and stabilize the American economy. Early in his presidency, in early 1982, America was in the midst of the worst recession since the Great Depression. More than nine million individuals were unemployed in November of that year. Many businesses were forced to close, and many families lost their homes as a result.
The economy gradually recovered after Reaganomics was implemented, and by the early 1990s, it was rising steadily.
Overall, the United States had a difficult time in the late 1970s and most of the early to mid-1980s. Many Americans had to adapt to a new political, economic, and social life in the 1980s as a result of the recession and President Ronald Reagan’s policies, which drastically altered the country’s environment. The decade is now remembered not only for its consumerism and materialism but also for a variety of other factors.
The 1980s saw a new definition of the term “yuppie,” which was used to designate young urban professionals who lived in (large) cities and had solid jobs, unlike the previous two decades.
Blockbuster films such as:
E.T. the Extra-Terrestrial
Back to the Future
exploded during the decade. Despite the economy, the 1980s are regarded as one of the most successful in popular culture since it saw the birth of cable networks such as MTV, which pioneered music video and started the careers of many renowned artists such as
and these are just a few that I have mentioned.
The early 1980s recession
The early 1980s recession is still remembered as one of the worst (most severe) economic downturns in history. It lasted from the beginning of 1980 to the beginning of 1983, and it affected almost every country on the planet. Despite the fact that World War II had ended more than 30 years ago, the recession of the 1980s is widely regarded as the most severe since the war.
The 1979 energy crisis, which was triggered by the Iranian Revolution, was one of the primary factors that contributed to the recession. The revolutions in the Middle East’s populous countries (Iran and Iraq) disrupted the global oil supplies and that led to all sorts of economic losses. The oil prices soared sharply at that time, particularly in late 1979 and early 1980, and remained that way until the mid to late 1980s.
Many countries, including Italy, Canada, Japan, the United Kingdom, and the United States, tightened their monetary policies in response to the oil crisis in order to raise interest rates and manage inflation.
In both 1980 and 1981, a large number of countries around the world faced economic downturns. The biggest and steepest decrease in economic activity, however, did not occur until 1982. Unemployment rose to the extent where the World Bank coined the phrase “global recession of 1982” to describe the period.
Even large countries like Japan and the United States were affected by the crisis at that time. Eventually, until 1985, most OECD nationals were affected by high unemployment. The US loans and savings problem, as well as slowdowns in Africa and the Caribbean, and the Latin American debt crisis, were all long-term impacts of the recession that began in the early 1980s.
The things that led to the Venezuela crisis
For three consecutive decades, from the 1950s to the 1980s, the Venezuelan economy grew at a steady pace. During that time, the country drew a large number of immigrants and even had the highest quality of life in Latin America at one point. Venezuela was regarded as one of the most powerful and rich countries in South America for nearly three decades, as well as one of the most chosen tourist attractions in all of South America.
However, after the drop in oil prices in 1980, the economy shrunk and the currency began a gradual depreciation, which triggered the crisis. Inflation levels grew from 1982 to 1986, fluctuating between 6 and 12 percent. Venezuelan President Carlos Andres Perez implemented intermittent changes in the mid and late 1980s, including inviting liberal economic policies that opened up the country’s markets.
The recession of the 1980s was one of the leading factors that contributed to the Venezuela crisis. Since the late 1970s and early 1980s, there have been numerous chronic food and medicine shortages, as well as human rights violations. Furthermore, political corruption, authoritarianism, company closures, productivity declines, heavy reliance on oil, and gross economic mismanagement all led to Venezuela’s disaster.
The crisis in the country has affected the lives of all of its citizens. In fact, research from 2017 revealed that the hunger had escalated to the point that approximately seventy-five percent of the Venezuelan population had lost over 8 kg, while more than half of the people are having difficulties receiving enough to meet their basic food needs. According to Reuters and various reports from the UN, by March 2019, at least 94% of the citizens live in poverty and nearly 3.5 million have left their country.
As if these statistics are not enough, Venezuela has led the world when it comes to murder rates. In 2018, it had 81.4 per 100,000 killed, which made it the third most violent country on the planet. As of now, the peace index in Latin American countries is 2.671, which makes it the 20th most dangerous country in the world.
The reason Venezuela's economy collapse
Hugo Chavez was elected President of Venezuela in December 1998. During his first four years in office, he was able to stabilize the country’s economy by implementing stronger social-democratic programs than his predecessors. Chavez employed populist techniques with oil revenue to aid the South American country’s economy by increasing its reliance on high oil prices.
Despite the fact that he has done a lot more to reduce unemployment and keep the economy growing steadily, the problem in Venezuela persists and things went from bad to worse after the 21st century entered. Eventually, Hugo Chavez announced an “economic war” in June 2010 in response to an increase in the number of shortages in the country and this is when the economy of Venezuela really crumbled.
The crisis that erupted during the Bolivarian Revolution has been characterized by high crime and death rates, hyperinflation, and rising famine, as well as enormous migration out of the country. But even after Chavez’s death in 2013, the economy has continued to sink into crippling debt, corruption, and incompetence under the leadership of his mentor and predecessor Nicolas Maduro.
According to many academics, Venezuela’s economic collapse is the single greatest in at least 45 years after World War II and The Great Depression. The tremendous social expenditure of the Chavez and Maduro regimes, as well as the drop in oil prices, were some of the major factors that contributed to Venezuela’s economic collapse. After Juan Chavez’s death, not much has changed, as Nicolas Maduro’s rule is quite similar, if not identical. Presently, the people are still suffering and more and more Venezuelans leave their home country in the hope of finding safety and security in other (foreign) countries.
The US economy in the 1980s
In January of that year, the United States entered the 1980s recession but was able to quickly stabilize and return to growth five months later, in July 1980. Despite the fact that the country recovered, the unemployment rate did not change until late 1982 and that had its consequences. After lots of ups and downs, the US economy experienced a significant comeback in the early 1990s and began a long period of expansion in the mid to late 1990s.
But prior to that, the 1980s were marked by a number of major causes. The US economy suffered from the aftermath of the energy crisis and the Federal Reserve’s (FR) inconsistent monetary policy, which aimed to combat double-digit inflation.
Unlike the majority of countries in Europe, North America, South America, and Asia, which took nearly a decade to recover, the United States accomplished so in about five years after the 1980s recession had begun. In July 1983, the recession was declared officially over. The car industry had lost more than $187 million at the time, while nonfarm payrolls increased by 2.9 million. By 1985, payroll employment had increased by ten million people. Despite the fact that the recession ended in mid-1983, it had a significant influence on the economy.
The savings and loans industry was the hardest hit, as interest rate limitations limited the damage. Despite the fact that the US economy grew steadily after the crisis ended, it took a long time to return to pre-crisis levels. Manufacturing employment peaked at 17.9 million in June 1979, then fell dramatically by 2.8 million before bottoming out four years later in January 1983.
How the oil crisis started in 1979
The Second Oil Crisis, which began in 1979, is also known as the 1979 Oil Crisis. The 1979 oil crisis was triggered by a decline in oil production at the same time as the Iranian Revolution. The Islamic/Iranian Revolution occurred between January 1978 and February 1979 and was marked by a series of events. Many student movements, as well as Islamist and communist organizations, backed it. The Pahlavi dynasty, which was ruled by Shah Mohammad Reza Pahlavi, was deposed at the end of the Iranian Revolution. The Islamic republic and Grand Ayatollah Ruhollah Khomeini succeeded Pahlavi.
The world oil supply has been decreasing by 4% since 1979. The oil market’s reaction was to start raising the price of crude oil dramatically over the next 12 months. Crude oil eventually doubled in price to $39.50 a barrel, which had not happened in recent years. Long lineups at petrol stations and fuel shortages resulted from the price hike, which was reminiscent of the first oil crisis in 1973.
When the recession began in 1980, things took an unexpected turn. Following the start of the war between Iran and Iraq, Iran’s oil production plummeted. Iraq’s oil production also decreased dramatically, resulting in global economic downturns. Oil prices did not recover to pre-crisis levels until the mid-to-late 1980s. From September 1980 through August 1988, Iran and Iraq were engaged in a long-running armed confrontation.
Oil prices began a gradual drop after 1980, which lasted for the next 20 years. The sole exception is during the Gulf War in the 1990s when there was a temporary rise followed by a 60% drop-off. Mexico, Venezuela, and Nigeria were among the countries that were major oil exporters in the closing years of the twentieth century. Despite the fact that all three of these countries experienced a recession in the 1980s and were in the midst of an economic crisis for several years, they nonetheless increased their production. In addition, as oil from Alaska and the North Sea flooded the market, the Soviet Union rose to become the world’s greatest producer.
The things Reagan do for the (US) economy
Ronald Reagan is the United States’ 40th President. His presidency began in January 1981 and ended in January 1989, eight years later. The recession began shortly after Reagan’s mandate began. Ronald Reagan pushed numerous ideas that are now known as Reaganomics in order to find a solution to stabilize the American economy. Reaganomics is based on the “Laffer Curve” to some extent. The “Laffer Curve” was created by economist Arthur Laffer in 1974 to demonstrate how a tax could stimulate the economy to the point where the revenue base is extended.
During the 1980s, the US president proposed economic policies aiming at reducing government regulation, lowering capital gains and federal income taxes, and slowing the increase of government expenditures. He also wanted to reduce constantly rising inflation by tightening the money supply.
Reagan’s policies are now generally connected with and labeled as trickle-down economics (income tax cuts can increase the supply of labor and give employees more motivation to work), supply-side economics (business tax cuts are the greatest method to build the country’s economy), or voodoo economics (primarily utilized by George H.W. Bush) by his opponents. Reagan, on the other hand, and his supporters refer to them as free-market economics.
The effects of Reaganism are still being argued today. His supporters point to increased GDP (gross domestic product), the end of stagflation, and the start of an entrepreneur movement that grew over the next few decades. Critics, on the other hand, point to decreased economic mobility, an increasing income difference, and a national debt that will bankrupt the country in the next eight years.
But, in terms of the economy, what did Ronald Reagan accomplish? First, he reduced tax rates sufficiently to boost consumer demand. Individuals earning $108.300 or more were subject to a top tax rate of 70% beginning in 1980. By the end of his presidency, the top tax rate for single people earning $18.500 or more was 28 percent. He also reduced the corporate tax rate from 46% to 40% while raising various excuse taxes and Social Security payroll taxes.
In addition, the 40th President of the United States repealed Nixon-era price limits on gas and domestic oil. He loosened bank rules and deregulated services including cable television, interstate bus travel, long-distance phone service, and ocean shipping. Ending the inflationary spiral was perhaps one of Ronald Reagan’s most important accomplishments. Inflation was 12.5 percent in the early 1980s, and these rates were damaging the economy. Reagan eventually used a contractionary monetary strategy to bring the spiraling inflation to a halt.